The International Monetary Fund (IMF) anticipates that This year there will be a slowdown in economic activity for the area of Latin America and the Caribbean – although it expects “an important rebound” for Argentina – In a context marked by Growth and upward risks in inflation. He pointed out Rodrigo Valdésdirector of the Western Hemisphere of the Agency, within the framework of a press conference offered this Friday in Washington.
The IMF calculates that Regional growth will decelerate 2.4% recorded last year to 2% in the present- half point than projected last October- before returning to 2.4% in 2026.
Valdés said that the activity in Latin America and the Caribbean was largely driven by consumption in a context of resilient labor markets. However, he warned that “The slowest global growth, the high uncertainty, the impact of tariffs and the strictest internal policies in some countries weigh on growth.”
The official clarified that there is an important heterogeneity behind this average deceleration. The Gross Domestic Product in Mexico will decrease due to the application of strict macroeconomic policies and for being the country most affected by the United States commercial restrictions. The background is also waiting “A relevant deceleration in Brazil driven by stricter policies”. This is bad news particularly for Argentine exporters, since this country is an important destination, the main one for external manufacturing sales.
Instead, Valdés said that “In Argentina and Ecuador, with programs backed by the IMF, we expect an important rebound”.
Inflation
In terms of inflation, the fund observes that convergence towards the objectives slowed in 2024, in the midst of a global disinflation that fades and a depreciation of national currencies.
However, the agency projects that “A gradual decrease in inflation continues, although most countries will not reach their goals before 2026”Valdés said.
In this regard, he pointed out that the current economic landscape is molded by a complex interaction of global factors ranging from tariffs and disturbances of value chains until the volatility of raw material prices and financial markets, and political uncertainty. And said that “The impact of these factors on growth is largely negative.”
Referring specifically to the rise of rates arranged by the United States, the official considered that “although the tariffs applied to the region are relatively low, A deceleration of global growth could affect the demand for commodities and have greater indirect effects for Latin America through the depreciation of raw materials and exchange rates ”. And concluded that “Taking this into account, we see downward risks for growth and upward risks for inflation.”
In the field of policy recommendations, Valdés emphasized “In need of strengthening public finances.” He assured that “This is not the time to alter political frameworks or abandon tax plans” and said that “Fiscal consolidation must continue without further delay, at the same time protecting public investment and priority social spending”.
In line with the dollar flotation policy implemented by the Argentine government, the official considered that “It is important to allow exchange rates to absorb shocks to the foundations”
And, of course, he reiterated that the fund considers “urgent” To improve warm potential growth in the region, implement Structural reforms. That is to say, Strengthen governance, increase productivity improving the business environment, achieve the predictability of policies, reduce informality and promote greater intra -regional trade.
Source: Ambito
